A: Without question,
operating your own business from home has several tax advantages.
You can deduct a percentage of many home-related expenses based on
how much of your home you can qualify for a home-office
deduction.

For example, if you have a 2,000-square-foot home and a
200-square-foot office, you could deduct 10 percent of many
expenses. Here are the most typical deductions:

A percentage of your rent if you rent or lease

A percentage of your mortgage interest if you're buying
your home

A percentage of real estate taxes and homeowner association
fees

Household supplies and cleaning services for the business
portion of your home

Repair and maintenance of your home office

Utilities (electricity, gas, water) attributable to the
business use of your home

Trash collection

Furniture in your household that you convert for use in the
home office

Phone services, minus the base local service for the first line
into your home (Lines devoted to the Internet and faxing may be
entirely deductible.)

Business use of your automobile from the time you leave your
door (If you had an office away from home, you would have a tough
time deducting the cost of travel between your home and
office.)

Taking all the deductions you're eligible for can offset the
higher cost of health insurance you have to pay as a self-employed
person. For more information, see IRS Publication 587, Business
Use of Your Home.

Paul and Sarah Edwards are the co-authors of 15 books,
including The Entrepreneurial Parent. Send them your
start-up business questions at www.workingfromhome.com or in care of
Entrepreneur.